Fair board ignored warning about conflict of interest

With the Orange County Fairgrounds on the auction block in 2009, fair board members worked with former state Sen. Dick Ackerman to set up a private foundation and buy the 150-acre fairgrounds.

They plowed ahead with their plan despite a stern warning from the California Attorney General’s Office that such an effort – if successful – would be considered an illegal conflict of interest, according to emails obtained by the Orange County Register.

Deputy Attorney General Deborah Fletcher, who served as the board’s lawyer, wrote in a May 2009 email that the effort by board members to buy the fairgrounds through a non-profit entity would be considered self-dealing under state laws and could bring criminal or civil charges. Fletcher also warned that a planned closed-door session on the effort would violate open meeting laws unless the board publicly identified the land for sale and with whom it was negotiating – which it was unwilling to do.

She said if the board proceeded with the closed meeting, “I will respectfully need to recuse myself, as my office would prohibit my participation in any action constituting statutory violations.”

Although the closed session was canceled, board member David Ellis responded to Fletcher’s warning in an email to Ackerman: “Dick…this is what I am dealing with. An idiot deputy attorney general.”

The fair board’s foundation never submitted a bid and the state eventually abandoned its effort to sell the Orange County fairgrounds. But the behind-the-scenes-maneuvering that year remains of interest to the Orange County District Attorney and the Fair PoliticalPractices Commission, who are investigating whether any state laws were violated.

The state Attorney General’s Office dropped the fair board as a client in December 2009 because of conflicts over the board members’ purchase effort. Fletcher’s email will likely beof interest to local prosecutors who were given permission by the current fair board to talk with the attorney general’s office as part of their investigation.

Interviews as well as hundreds of emails between Ackerman and board members – obtained by the Orange County Register through the California Public Records Act – give a behind-the-doors look at the secret effort to buy the fairgrounds in 2009.

Ackerman, an attorney with Nossaman LLP, ordered a legal analysis from his firm in July 2009. The analysis, done by a summer associate who had not yet passed the bar exam, concluded it would not be illegal for board members to buy the fairgrounds as a private foundation.

In an interview, Ackerman said the fair board paid him $50,000 in public money to determine whether the sale was feasible, partly by contacting legislators. Ackerman said he worked separately on the effort to set up the foundation.

Ackerman admitted he worked simultaneously on both jobs, but said he was paid privately for the purchase effort.

Critics have said that the fair board’s use of tax dollars to hire a lobbyist to represent board members attempting to privately buy the fair could be an illegal gift of public funds.

“Some of the (new) board members are trying to make something out of nothing,” Ackerman said. “It was all above board.”

Activist Theresa Sears, part of an internal board committee that investigated the purchase attempt, said billing for the public and private jobs was all “mashed together.”

“Who in their right mind would mix them (together) on the billing statements?” Sears said.

Investigators are looking at Ackerman’s dealings with the fair board, where the money came from and how it was spent. The former legislator also is suspected of violating the state’s one-year ban on former legislators lobbying ex-colleagues. Ackerman retired from the senate on Nov. 30, 2008.

Ackerman said Nossaman LLP got about $50,000, with another $40,000 going toward an appraisal of the fairgrounds – all of that paid from state funds. More was spent to obtain title insurance, but Ackerman was unsure how much.

A separate private fund was used to pay for work done on forming the non-profit foundation to buy the fairgrounds, Ackerman said.

The public money that flowed to Ackerman’s firm was paid through another fair board contractor, land-use consultant LSA Associates, sparking accusations from critics that the money was laundered. Ackerman said this week he didn’t know why he was paid through such a byzantine process.

“That’s not my call. I’m not involved in that process,” Ackerman said.

Billing statements show Ackerman had contact with former state Senate Minority Leader DennisHollingsworth and former state Senator Jose Solorio before a state vote in July 2009 to sell the fairgrounds. According to a May 22, 2009, email, Ackerman also contacted ex-Governor Arnold Schwarzenegger’s chief of staff Susan Kennedy and staff member Fred Aguiar, also a former state legislator. Ackerman calls Aguiar “an old friend” in the email and says he talked with them about how to proceed.

Ackerman said he did not technically lobby anyone, because he did not ask legislators to vote one way or another.

“I did have contact with a number of legislators, and county supervisors, to find out if they thought (the sale) was a good idea or a bad idea. None of my contacts had anything to do with any specific legislation,” Ackerman said.

However, Robert Stern, former head of the Center for Governmental Studies in Los Angeles and ex-counsel to the state Fair Political Practices Commission, said the simple fact that legislators needed to approve the sale, made contacting them an act of lobbying.

“Why would they hire him other than to get him to try to influence the legislature?” Stern said. “My guess is that he forgot about the (one-year) provision.”

The emails indicate that Ellis and Ackerman were the driving forces behind the local effort to purchase the fairgrounds. Also involved in the effort was Jim Henwood, CEO of Fairplex in Pomona, according to the emails. The emails show that Ackerman and his law firm secretly began work creating the non-profit foundation and investigting the purchase in May 2009.

Ackerman advised the fair staff in December 2009 that the law did not require them to release his billings under the California Public Records Act. He advised that the documents were covered by attorney-client privilege.

Ellis, in response to a public records request by Costa Mesa Councilwoman Sandra Genis, said in an email to Ackerman that “we will slow walk it and respond sometime in the next century.”

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